Maximum interest rates on tenge deposits will be abolished for all banks in Kazakhstan.

Instead of the maximum interest rate, the Deposit Insurance Fund (DIF) will begin publishing information about market rates that have developed in the retail deposit market on its official website.

“We expect that the reform will give banks more freedom in setting interest rates on their deposits. The rates for tenge deposits will be determined by market factors, and the primary benchmark for banks when establishing rates will now be the market rate, defined by all market participants. This will create conditions for healthy competition among banks and provide a new impetus for the development of the retail deposit market, especially in segments where there are few banks,” commented the head of the DIF Adil Utembaev.

Since 2008, the DIF has set maximum rates for all banks, and if they exceeded these rates, banks were required to pay a significant increased contribution to the DIF reserve, intended for guarantee payments. In 2018, instead of establishing two maximum rates for tenge and foreign currency deposits, the Fund began to determine maximum rates monthly based on market rates across deposit groups.

Starting January 1, 2024, the DIF has abolished the establishment of maximum rates for tenge deposits for most banks. Maximum rates have only been retained for a small number of banks that, according to the DIF methodology, are categorized as less than well-capitalized. At the same time, a systemic risk contribution was introduced for all banks, the amount of which depends on how much their rates deviate from the market level.

Now, starting March 1, 2025, less than well-capitalized banks will determine their deposit policies under the same market conditions as other banks. In addition, by raising rates on their deposits, such banks will pay an increased contribution proportional to the degree of excess and the volume of funds attracted, along with the systemic risk contribution.